Simply put, there are two types of record companies, Indie and Major. As you probably know, both have their advantages and both have their disadvantages. Really, it all boils down to what type of record deal you are looking for. Before you try to figure out how to get a record deal or how to get signed, you really need to decide which is the best fit for you.
Let’s start with major labels. These guys have virtually everything at their beck and call. They have a department for everything and if you get signed with a major label you will have the opportunity to get unbelievable exposure. The disadvantage to a major label is that all of that literally comes at a price.
When your albums hit the market, your royalty take home will only be somewhere between 12-20%. Keep in mind though that if you were given an advance or tour money, you will have to start paying that back. Once the debt is paid back, then you will start seeing some profits. So, before you work on how to get a record deal, you must decide if major is right for you.
Independent labels are just as they sound, privately owned small companies usually started by an individual who takes a hands-on approach to finding and signing music they respect and enjoy. An Indie record deal can be made for anything from a single to several albums.
If there is an advance offered, it will not be as large as one from a major label. But they will still generally finance recording costs and allocate a budget for paying agents, media and some tour support.
On the advantages side, once your album hits the market there is less of a debt to recoup and royalties are usually at a higher rate. In fact, sometimes as much as half! On the downside, an Indie can’t usually allot quite as much money for marketing and tour support as a major so it might take longer to gain as much exposure as with a major label.
Lastly, we will quickly talk about publishing companies because they are an important aspect of how to get signed and what happens after. Publishing companies control the rights to the copyright of any material you write while you are signed with them. They will also continue to control the rights for a term of up to around 25 years after your deal with them is over.
Publishing companies receive their royalties from mechanical, performance, synchronization and grand right royalties. They will take their percentage, naturally, and then pass the rest onto you. The terms and rates of the contract totally depend on the contract you sign. Remember, you can sign with a publishing company before you even sign a record deal and they may even assist you in finding the right label for you.